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OTTAWA — At U.S. President Joe Biden’s Leaders Summit on Climate on Thursday, Prime Minister Justin Trudeau committed Canada to reducing its emissions by as much as 45 per cent below 2005 levels by 2030, up from the 30 per cent goal it adopted six years ago under the Paris Agreement. The announcement came the same week as a federal budget in which the Liberal government allocated fresh billions in green business-support funding. Here’s what you need to know about the announcements, and what they mean for Canada’s innovation economy:
The numbers: Canada will aim to drop GHG emissions by between 40 and 45 per cent from its 2005 output, which Environment and Climate Change Canada estimates at 730 megatonnes of carbon dioxide-equivalent. Federal, provincial and territorial measures already announced put the country on track for a 31 per cent reduction.
The others: Biden pledged cuts Thursday of up to 52 per cent, a goal his administration plans to achieve in part through economic support for domestic clean-technology development and manufacturing of products like EV batteries. Earlier this week, the U.K. government legislated its own accelerated target of a 78 per cent reduction from 1990 levels by 2035. Prime Minister Boris Johnson cited the potential for “pioneering businesses, new technologies and green innovation.”
The programs: Canada is also hoping that building green businesses will help it achieve its goal. Monday’s federal budget added $5 billion over seven years to the Strategic Innovation Fund’s Net Zero Accelerator, which will back “projects that will help decarbonize heavy industry [and] support clean technologies.” The program was established with an initial $3 billion in December 2020, via the Liberal government’s new climate plan; it has yet to allocate any funding. The budget also included incentives for cleantech manufacturing and investment, as well as for projects in carbon capture, utilization and storage. And federal agencies Sustainable Development Technology Canada and the Business Development Bank of Canada both back startups and scale-ups in the space.
The pitch to business: “When I see the United States investing heavily in reducing greenhouse-gas emissions, I think this is going to open opportunities that we see once in a lifetime for small- and medium-sized businesses and companies to provide these technologies,” said Innovation Minister François-Philippe Champagne in an interview with The Logic on Wednesday.
The objection: Some cleantech CEOs have criticized Ottawa for subsidizing well-capitalized firms in sectors like oil and gas to cut emissions, rather than funding startup innovation. “None of those things are inherently ‘clean,’” Mike Andrade, CEO of Toronto-based Morgan Solar, told The Logic last year. “They just make previously dirty things less dirty.”
The response: “I think it’s right for us to invest to decarbonize a number of these industries, because then you can have a very competitive natural-resources sector, which is producing [commodities] with the lowest carbon footprint,” Champagne said, citing the steelmaking industry as well as Elysis, a joint venture of Alcoa and Rio Tinto which aims to smelt aluminium without direct emissions. In May 2018, the federal and Quebec governments each allocated $60 million to the Montreal-based company.
“The big OEMs of the world are looking to greening their supply chain,” said Champagne, referring to car manufacturers. Ottawa is bidding to build up a domestic supply chain for batteries and other EV parts, and Ford and Fiat Chrysler have both announced publicly subsidized plans to build zero-emissions vehicles in Southern Ontario.
